Lawmakers plan to expand New Jersey’s increasingly popular film tax break program by moving ahead with a bill extending it for five more years, and injecting it with millions of dollars more in available incentives for businesses.
Assembly Bill 5580 – which was approved by the Assembly Appropriations Committee on Thursday afternoon – would extend the program until 2029, rather than its current sunset date of 2024.
The measure also calls for raising the cap on the film tax credit program from $75 million to $100 million, but it would keep the cap at $10 million for digital media projects.
The original bill was designed to offer $425 million in credits during its five-year lifetime. But the Economic Development Authority, which oversees the program, revealed last month that demand has been outstripping supply. According to the EDA, there was $52.6 million left out of the $75 million available through June 30, 2020, but $62.9 million being requested by applicants.
But, neither the original nor the expansion bill includes any net-benefits test, which is a formula the state uses to determine whether the economic benefit of a project exceeds the incentives offered to attract it. Critics worry that the state could bleed out money over time because it lacks this test.
A 2018 analysis by the nonpartisan Office of Legislative Services found that the state could lose $425 million in revenue over the life of the program without the test.
“The payback is immediate,” Gov. Phil Murphy countered at an Oct. 1 event at Rowan University. “This comes to town, the circus comes to town … and you get immediate payback.”
The Senate Budget and Appropriations Committee approved the measure in June, but that version did not include the increased funds for the program.
A measure put forward by former state Sen. Ray Lesniak, a Democrat, for New Jersey’s next flagship tax incentive program, calls for the inclusion of a film and digital media tax break program.
But Lesniak told NJBIZ that his proposal could be tweaked and changed, and did not worry that the expanded program would conflict with his bill.
In recent months, Murphy has pushed for raising the cap and extending the program, arguing that the state stands to benefit from typically, longer-lasting (as compared to film) television productions.
“If a television pilot takes hold and it’s successful, that can be an eight or 10-year run, and those are big money-spenders,” he said at Rowan. “Movies are great but they come and go. TV programs, if they’re hits they last.”
Murphy has remained adamant that New Jersey’s next incentive programs be capped, unlike the Grow New Jersey corporate tax break, and the Economic Redevelopment and Growth gap financing program.
Lesniak, and other opponents of the cap, point to the need to increase the amount of dollars available under the film tax break program as evidence that a cap is counterproductive to luring business into New Jersey.
Several prominent productions were recently filmed in the state after receiving incentives, such as WB Studio Enterprises Inc.’s film “Joker” which was shot partly in Newark, and Steven Spielberg’s remake of “West Side Story” which is being produced in Paterson.
The EDA, at its board meeting earlier on Thursday, approved two tax breaks for Universal Televsion LLC totaling $25.6 million — one for their production of season one of drama series “The Enemy Within,” and another for the anthology series “Little America.”